Streamer On2.com Scores With Showtime, USAi Deals

Video-streaming provider On2.com Inc. notched two big deals recently, as Showtime Networks Inc. and USA Networks Interactive (USAi) announced separately that they will use its streaming technologies.

The deals are big wins for On2.com, which competes with entrenched streaming-technology providers Microsoft Corp., maker of the "Windows Media Player"; Apple Computer Inc., developer of the "QuickTime" player and format; and RealNetworks Inc., with its "RealPlayer."

The deals also shed light on the diverging streaming-media strategies of Showtime and USAi as they determine how best to complement their traditional business of delivering video programming to the TV with their Internet properties, which are now accessible by more and more broadband users.

Showtime will use On2.com's video-compression and decompression (codec) technology, dubbed "TrueMotion VP3," to offer video content on the Web and promote its new series, Resurrection Blvd. and Soul Food.

USAi will use TrueMotion VP3 across its media properties, starting with SCIFI.COM, where it will offer short science-fiction films and progress to more complex "multipath" and interactive programming.

On2.com will provide both programmers with video encoding, serving and hosting services. The company uses a proprietary video codec and player technology that allows for streaming over the Internet at data rates of 250 kilobits per second and above to produce high-quality, full-screen (640-by-480-pixel), full-motion video. Bit rates can be dynamically adjusted to accommodate varying Internet-connection speeds.

According to Gene Falk, senior vice president of Showtime's Digital Media Group, the programmer selected On2.com because of the quality of the video displayed by its player.

"One of the barriers to using broadband for video is compression," Falk said. On2.com's technology produces "first-rate, almost TV-like" video. So the goal is to offer video on as full of a screen and at the highest resolution possible to showcase programming in the best way over the Internet, he added.

Similarly, "quality, quality, quality" was the mantra spoken by USAi senior vice president Ben Tatta when he was asked about the selection of On2.com.

"We were looking for some time for a partner," Tatta said. Ultimately, On2.com "compresses video and audio in a way no one else can," letting USAi "present content in as close to broadcast quality as possible."

With On2.com's technology under its wing, USAi will initially offer about one-dozen short science-fiction flicks, running 10 to 12 minutes in length. The shorts will be available on the "Exposure" portion of SCIFI.COM.

Part of the plan, Tatta said, is to poll Web surfers who stream the films. Those that receive the thumbs-up will be shown on-air.

For its part, Showtime will use On2.com's technology to offer video clips of Resurrection Blvd. and Soul Food hosted on both On2.com and Showtime's Web site.

With help from interactive-video backer Softcom Inc., Showtime will develop the Resurrection Blvd. site with video diaries of show characters, cast-member interviews and series highlights.

The purpose is to offer the Web audience a peek at both shows and to ultimately entice them to tune in to the shows or to become Showtime subscribers.

"We want to start to understand how we can use [broadband] technology to speak to our audience and potential audience," Falk said. By attracting a Web audience that otherwise wouldn't be exposed to Showtime's programming, the Showtime Web site "can be a wonderful marketing tool," he added.

Additionally, through chat rooms devoted to specific programming, Showtime is "looking at online and interactive platforms as a way of adding value to our subscribers."

Showtime has created Web pages devoted to both its WhirlGirl animation and Stargate SG-1 science-fiction series. A "play-along" episode of Stargate was created online to parallel the broadcast production, offering aficionados extra camera angles and deeper involvement in the show.

While Web companions to programming have proved successful as marketing tools, Falk said, the network probably won't be offering full-length Web versions of its programming, adding, "We don't want to give away what other people are paying for."

Taking a different tack, Tatta said USAi will move beyond short movies to introduce increased levels of interactivity.

"The most important aspect of the medium is that it's interactive," Tatta said. As an example, Tatta plans to develop programming that can be seen through the "eyes" of different characters and episodes with different endings. It will also let users influence plot lines.

Tatta is a believer in "multipath programming," which the gaming world utilizes to offer many possible experiences from the same program.

The Showtime and USAi deals have been a boost to On2.com, which faces huge challenges in breaking into a streaming market embroiled in a codec war between Microsoft, RN and Apple.

On2.com founder and chief technical officer Dan Miller said the company has forged agreements with several tier-one Internet-backbone providers in North America, including Frontier Corp. and Qwest Communications International Inc., for direct colocation of its servers, thereby moving its hosted content closer to Internet end-users.

Miller wouldn't rule out a possible collaboration with "edge-network" leader Akamai Technologies Inc. "In this market," he added, "it's very important that the streaming be done as close to the user as possible."

Miller was short on details about the VP3 codec, citing proprietary concerns, but he noted that it is not based on MPEG (Moving Picture Expert Group).

"We use a lot of different pieces of technology in our codec," he said, adding that the company is constantly working to improve its technology.

On2.com's TrueMotion technology has been licensed to Sega Enterprises Ltd. for the "Dreamcast" gaming platform.

Recognizing the predominant streaming platforms in use today, On2.com announced this month that the new "TrueMotion VP3.1" includes support for Windows Media Player, QuickTime and RN's "G2" player.